I was told that when you buy a car with a trade-in, you only pay sales tax on the difference in value between the two cars. Is this correct?
Where are you?
In NY, they charge you sales tax on the final price of the car.
IE: Buy a $20,000 car -$6000 trade in= you pay sales tax on $14,000.
In most states that is correct. However, that is not universal truth.
That’s the way it works in Minnesota anyway but check with your DMV. I usually don’t have a trade in and the last one I only got $500 for so doesn’t make much difference to me.
Yep! Bought many a car that our bill of sale said $100…;)
Like most automotive things it will vary by state. Here in OK you will get taxed on the MSRP of the car with the trade being irrelevant.
The tax commission here even hits you for a tire disposal fee (varies based on size with 18s and up being far more costly) on a new or used car, title transfer from another state, etc.
I have never traded anything in but I am sure in CA they tax you for the purchase price, plus tax you on retail price of your trade in plus some gas tax and some fwy tax. They just dropped the Arnold tax, waiting for Jerry tax.
Your DMV’s web site probably has the answer.
The MSRP? Not the actual final selling price of the car? I really doubt that they charge tax on such an arbitrary figure as the MSRP.
In OK they charge it. Buy a brand new car (say 30 grand) and they allot you 5 grand trade on your old car. You will pay a flat fee 91 bucks + a few incidentals and will get hit for 3.25% of the selling price of the car in excise tax.
The law says that trade-in values cannot play a part in figuring that excise tax.
The state nails you even on a used car no matter what. Buy a 10 year old fixer-upper BMW with a blown motor for 300 bucks? They’re going to tax you just like it was one you just happily drove off of a dealers’ lot.
Registration sticker shock is not a rare phenomenom here.
Good lordyy! I’m hoping no NY government people read these boards!
They don’t need new ways to wring what little money we have out of us…
Excise tax is not the same as sales tax. Most States have both.